MANILA — The National Economic Development Authority (NEDA) on Wednesday allayed worries that the Maharlika Investment Fund will add further to the Philippines' sovereign debt.

The statement came a day after President Ferdinand Marcos, Jr. signed the Maharlika fund into law.

• Marcos Jr. signs Maharlika Investment Fund into law

Senate Minority Leader Koko Pimentel earlier warned that Maharlika “could significantly exacerbate the Philippines’ national debt” sans a fiscal surplus.

NEDA Secretary Arsenio Balisacan however said this "will not happen by design" as Maharlika will tap idle government funds.

Malacañang has also said that Maharlika will allow the government to leverage underutilized financial assets to stimulate the economy without additional fiscal or debt burden.

"And what the fund is trying to do is to put those into more productive, higher yielding instruments so that you can earn more from those funds,” Balisacan added.

• Philippine debt hits record P14.1 trillion in May

He said another objective of Maharlika is to get the "investment community to invest into the projects supported by the fund so that the fund could grow bigger and support more projects.”

Balisacan added that the MIF will allow the country to have other fund sources to reduce its reliance to debt.

“If the officers and the board will do their work properly—there’s no reason why they can do their work properly you know, if the governance structure of the fund is put in place, a good government structure… then you know, it should be able to earn much more than what you are paying – for example, for debt,” he said.

He also reiterated the need for the country to expand its sources of investment funds as the Philippines is expected to become an upper middle income country in the next few years.

“If we succeed in becoming an upper middle income country in which we are projecting to reach by 2025, then our access to concessional loans will also be now limited, kasi we’ll lose some of those advantages of being a lower middle income country or low income country,” Balisacan explained.

• Diokno: Finance chief to sit as an ex officio in Maharlika

The Philippines’ sovereign debt hit a record P14.1 trillion at the end of May, the Bureau of Treasury earlier said.

In less than a year since assuming the presidency, the administration of Marcos, Jr has added around P1.31 trillion to the country’s debt.

The Philippines’ sovereign debt ballooned during the pandemic as the administration of former President Rodrigo Duterte borrowed heavily to fund its COVID-19 response. Duterte’s ambitious infrastructure push also contributed to the higher debt levels.